The Paramount Decrees: Paramount’s Beginnings - Pt. 1

The development of the Hollywood studio industry features a number of people who drove it forward. Today, we're talking about Adolph Zukor and William Hodkinson, and how their work led to the founding of Paramount.  

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Episode Transcript

Speaker 1 (00:01):
Welcome to Stuff You Missed in History Class, a production
of I Heart Radio. Hello, and welcome to the podcast.
I'm Holly Fry and I'm Tracy d Wilson. Tracy, It's
time for a little bit of film history, which I
always love. This is one that seems especially engaging to

(00:25):
me because of this weird time we're loving through. We
can't help but look at everything through that lens um.
We know that this pandemic is impacting virtually every industry
in a variety of ways, and the film industry is
no exception. Studios, of course shut down in the spring
when the pandemic was declared, but so did theaters. Some
have reopened, some have not. And as we've all seen,

(00:48):
films that were already made or in post production have
been all over the place in terms of how they've
been distributed to consumers. And that, along with some other
stuff that we will get to as may me think
about film distribution historically, and so initially I wanted to
talk about the paramount decrees of That is a case

(01:10):
that's been in the news lately, and it's a good
example of how things that have happened in the past
still offer up some surprises decades later. But as I
started working on it, I really found myself wanting to
dig a little bit deeper into how things got to
the point where that particular court case happened, starting with
how the studios developed, because those two things are inextricably intertwined,

(01:33):
and because it has roots in very early days of
the motion picture industry in the US, So just how
the studio system grew led to what happened legally, and
this becomes a lot, so we are splitting it into
two parts. So in this first episode, we're going to
talk about the people and events that led to the
establishment of Paramount Pictures as a key player in the

(01:54):
movie industry. And then in the second episode, we will
talk about the two court cases against Paramount out as
well as other defendants in the first half of the
twentieth century. And then we're going to touch on recent
developments that are related to all of those legal proceedings
which went on for years and years and recent means recent,
very weeks ago as of when we are recording this.

(02:18):
So to really get to the roots of this story,
we have to start with Adolph Zuker. Zucker was born
on January seventh, eighteen seventy three and richer Hungary, and
in Hungarian his last name would be were like Zuker,
but he seems to have stuck with a pretty Americanized version.
By the time he was seven, he had already lost

(02:38):
both of his parents. He never really knew his father,
who died when Zucker was one, and although his mother
had remarried, instead of staying with his stepfather, he was
moved to live with his uncle. And though the family
had hoped that Adolph would become a rabbi, his fascination
was studying religious history was really all about the stories

(02:59):
and much less about the spiritual aspects of Judaism, at
least as a personal calling. As a teen, at Off
instead became an apprentice to a shopkeeper, and it was
through the shopkeeper's daughters that he learned about pulp fiction
from the United States. The prospect of being a shopkeeper
was really not any more appealing to add Off than
becoming a rabbi had been. He eventually convinced his family

(03:22):
to let him sail to the United States with a
tiny sum of money it's estimated at forty dollars. Who's
gonna try to start a new life Yeah, that probably
didn't seem like a tiny sum at the time, but
when you think about starting a brand new life somewhere else,
it doesn't go very far. This whole thing was a
really arduous undertaking. So first of all, he had to

(03:43):
book the lowest class of passage for the journey UH
that came with no amenities. There was a degree of peril.
Their stories about how he sowed his forty dollars into
the lining of his clothes so that no one would
rob him when he slept on the boat. And then
once he arrived in New York, he didn't know anybody
and he had to start entirely from scratch to try
to find work. He eventually settled into a position as

(04:06):
a furrier's apprentice. He first, according to most stories, started
out just sweeping the floor and then kind of became
an apprentice, but he was also taking classes at night
to improve his English, and some stories say he also
took classes uh in business as well. With then just
a couple of years, he had become a skilled designer
and started working as an independent furrier by the age

(04:26):
of nineteen. He moved to Chicago a year later in
eighteen ninety three, when the World's Colombian Exposition was there.
He wound up staying in the city and becoming a
partner in the novelty for company with a fifty percent share.
The business made a lot of money, but after a
misstep and predicting trends, Zucker really found his fashion career

(04:47):
on a downslide. And while he moved back to New
York and got back on his feet thanks to his
connections in the fur industry, Zucker was already starting to
think about film. He also got married during this time
in eight nine seven to a young woman named Lottie Kaufman.
They stayed married for the rest of their lives. One
of the four years that Zucker became friends with during
this time was Marcus Low. That name is familiar to

(05:11):
you because of Low cinemas. There's a reason Zooker even
took an apartment across the street from Low, and their
families remained friends for life. So he had previously mispredicted
a trend, the opposite happened in nineteen o two. He
made a small fortune after correctly predicting a trend for
Red Fox that year, and Zucker wanted to invest all

(05:34):
this money that he made it was somewhere between a
hundred thousand and two hundred thousand dollars. His choice for
this was investing into the entertainment industry at often. Several
of his friends in the fur industry invested in a
penny arcade that was opened by Mitchell Mark in nineteen
o three. It was on Fourteenth Street near Broadway. This arcade,

(05:55):
nicknamed Automatic Vaudeville, made a hundred thousand dollars in its
first year. Zucker left the fur business completely soon after
that to expand his penny arcades into other locations, and
the next evolution of his entertainment business was to set
up an arcade with a theater to show motion pictures.
So the top floor of Zooker's Automatic Vaudeville was outfitted

(06:17):
with two hundred seats, and for a nickel, customers could
watch a fifteen minutes show. This shift to showing motion
pictures required some enticement. Zucker described this change in the
offerings of the arcade later in his life quote, we
had this empty floor over the arcade, about forty ft
by two hundred fifty feet. We put in two hundred

(06:37):
seats and then began to worry because it seemed like
an awful lot, especially as most of our customers didn't
know what moving pictures were and we're used to paying
one cent, not five. So we put in a wonderful
glass staircase. Under the glass was a metal trough of
running water like a waterfall, with red, green, and blue
lights shining through. We called it Crystal Hall. And he

(07:00):
well paid their five cents, mainly on account of the staircase,
not the movies. It was a big success. This is
like such great packaging, right That staircase sounds pretty cool?
It does. Zoocker routinely sat in the sixth row of
the Crystal Hall theater while movies ran, and he would
turn around and watch the faces of the audience in

(07:20):
the rooms behind him as they reacted to the movies
that were being shown. And he noticed the patterns in
what worked for audiences and what didn't, and he used
that information to make decisions about what films to offer.
In nineteen o four, the St. Louis World's Fair featured
a novelty movie experience called Hale's Tours of the World,
was named for their inventor, George C. Hale. The attraction

(07:43):
was basically a decommissioned train car that had been set
up as a theater. The theater attendants dressed as train conductors,
and once they were inside, customers were shown travel films
while the car rocked and shook and the bell clanged
as though the whole thing we're traveling through a u
a Pean town our countryside. Zooker loved this thing. Uh.

(08:04):
He bought the rights to offer Hales Tours in New York,
and then he opened Hales Tours in Coney Island, Newark
and Pittsburgh after that. And initially they were really huge draws.
But two things ultimately doomed the Hales Tour to a
short life. One, once an audience had experienced this, the
novelty kind of wore off. There were a lot of

(08:24):
people that wanted to keep going back on the same tour.
Two new films were not being made, even though Zooker
is said to have asked the team at the newly
formed motion picture Patents company that is also known as
the Edison Trust and will reference that name a bunch
coming up to make more of them, but they were
not really interested in going in filming the European Countryside anymore.

(08:45):
Despite its initial success. Hales Tours ultimately landed Zooker's company
and six figure debt. While his business partners wanted to
consider declaring bankruptcy, Zucker would not hear of it. He
had another idea. Over the next two years, Zucker let
a project that turned all of the Hales Tour locations
into regular movie theaters. At the end of those two years,

(09:07):
the company was out of debt and turning a profit,
but he still had the problem of not having enough
new films to satisfy him. In nine, Zooker's company combined
with that of his friend Marcus Low. Low had also
been opening successful theaters of his own, and once the
companies combined under the Low Enterprises name at alf Zookers

(09:29):
work shifted completely. He focused on movies entirely, not so
much on the marketing or the locations or building out theaters,
but just the movies first, by traveling both the US
in Europe and simply going to the movies and watching
the audience and kind of tracking their reactions. We're going
to talk in a moment about how the information that

(09:51):
Zooker collected led him to develop bigger projects, but first
we will pause for a quick sponsor break. Adolph Zucker
wanted to explore the idea of longer form content instead
of the short films that were being produced in the

(10:13):
early nineteen hundreds. He had a vision that was for
a movie that was not just something for casual foot
traffic crowds of a busy city, but a level of
entertainment that would draw a crowd the same way as
theatrical play mind and that is how he came to
found the Famous Players Company, which was named for his
motto of famous players and famous plays. As that motto suggests,

(10:36):
Zucker wanted to get talent with established name recognition from
theater to star in films that were based on well
known plays. Yeah, in a lot of cases it was, Hey,
you got famous doing this play on Broadway. Can we
film that play and make it a movie. Famous Players
Company was actually set up more as the distributor to
release Zooker's first movie after production was already completed. That

(11:00):
movie was Queen Elizabeth, which starred Sarah Bernhardt. The film
had been shot in France and it was a British
French production with the title les a mur de la
Elizabet or simply La Elizabeth, and Zooker secured the U
S distribution rights for either thirty five thousand dollars or
forty thou dollars, depending on who you listen to. That

(11:21):
was considered an absurdly high amount of money, but Zooker
paid it, and then he had the film premiere at
Broadways Lyceum Theater on July twelfth, n twelve as a
huge event. The ticket price was massive for the time,
it was a dollar. Remember, he had been charging five
cents for his theaters in the automated vaudeville. But Zooker's

(11:42):
effort to market this longer length film, trading on Bernhard's
fame and the fresh concept of a longer form it
ran more than forty minutes, was ultimately very successful. So
from there things moved really quickly for Zooker. He got
more Broadway actors to make films based on plays that
they were already famous for this time with his company

(12:04):
actually making the films. He made versions of The Prisoner
of Zenda and The Count of Money Christo and several
other films, and less than a year he also left
low enterprises to focus on famous players company full time.
He transitioned Mary Pickford to film, initially paying her five
hundred dollars a week, which was more than two and
a half times when she was making on Broadway. And

(12:26):
then Pickford was of course catapulted to stardom, and well,
she probably could never have anticipated eventually getting paid ten
thousand dollars a week just a few years later. That
is not adjusted. That's ten thousand dollars in nineteen teens money.
In nineteen sixteen, Adolph Sucker merged his company with another
film company run independently by Jesse Laski. They created famous

(12:50):
players Laski. While Zucker was establishing himself in film, he
had also gotten into business with a man named W. W. Hodginson,
who was working on his own venture in the entertainment world.
So we're gonna talk about Hodginson for a minute. William
Hodginson was born in eighteen eighty one in Pueblo, Colorado.
His middle name was either Wallace or Wadsworth, depending on

(13:12):
what source you look at. Some sources include both of them.
The Online Archive of California, for example, which has a
collection of his papers, even lists him both ways in
the finding aid that accompanies that collection. There's not a
whole lot of information about Hodginson's early life. He worked
on a railroad, telegraph and as a salesman for a
correspondence school before moving into the entertainment business. In nineteen

(13:36):
oh seven, he opened one of the first movie theaters
in the United States. That was in Utah. Uh Yeah.
He originally started out in Ogden and eventually spread to
other places. He has some Salt Lake footprints. But Hodkinson
founded Paramount Pictures in nineteen fourteen. That Paramount Pictures not
what we think of today. It was strictly a distribution company,

(13:57):
but Hodginson was completely changing the way films were distributed.
Up to that point, distribution had to primary models. First,
there were regional rights, also called states rights. In this model,
the movie producer would sell their films to a salesperson
who had a regional distribution network, and then that person,

(14:18):
who then owned a copy of the film, would take
that copy to theaters to be played for audiences. The
salesperson would be paid by the theater owner. This usually
meant that the same film would be played basically until
it was unwatchably damaged. Because the regional person wanted to
make as much money off their investment in purchasing that
copy of the film as they possibly could. This meant

(14:41):
money up front for the producer, but then the regional
salesman made all the money after that. It also meant
that the producer had no control over the quality of
their film that the audiences might see. If you were
seeing it late in the run, it might look terrible.
We have all been to second run theaters and you
know how it is a different experience, so imagine that

(15:02):
getting worse and worse and worse. The second distribution model
at this time was called the road show, and in
this scenario, the producer would enter into a contract with
a popular first run movie theater to run their movie
as a limited run special engagement. So this was treated
sort of like a special event. Think of it like
a touring production of a play. And ticket prices reflected

(15:23):
that the road show approach made a lot of money
for producers upfront because of the higher cost to the consumer,
but that also only lasted for a short period of time.
These two approaches were often used in combination, so the
producer would have the limited run road show and then
would sell States rights copies. The road show screenings would
serve as part of the advertising model to drum up

(15:47):
interest as the film made its way into other markets
through this regional rights distribution. But Paramount Pictures was designed
to get out of that regional approach. Hodkinson thought that
it would be better to arrange nationwide distribution plans with
producers getting a cut of the profits from the box office.
Instead of doing this weird we sell you the movie
and you sell the movie to theaters. It was we

(16:08):
arranged for the theaters to do this and we'll all
make money together. This was so that there would be
a motivation for production companies to focus on quality. Better
films would draw more audience and make more money for everybody. Typically,
Hodkinson took thirty five percent of the profit and the
producers got and that went on as long as the
picture played, so a big change from producers giving up

(16:31):
all rights to profit once they had sold a print
to a regional distributor. Also, Paramount was providing money to
filmmakers as part of their deals, so while the company
wasn't making movies, it was financing them. Hodkinson, with a
much bigger stake in films, got exclusive distribution rights, so
he got control over how and where they were shown.

(16:52):
He would determine what markets and what specific theaters were
the best match for a given film. He negotiated deals
with UMAs that he arranged for marketing. This cut out
the sale of Prince to regional salespeople entirely. Another interesting
aspect of Paramount was that it wasn't exclusively Hodginson's company.

(17:12):
The producers who were part of his distribution model all
owned a piece of the business. They were kind of
like foundational members. Hodkinson started working on this idea when
he was working for the General Film Company in nineteen eleven.
The General Film Company was the distribution company that was
created by the Motion Picture Patents Company that is, once

(17:33):
again the Edison Trust. But while Hodginson's test efforts in
this model did really well, things did not go over
so well with the Edison Trust. And we're going to
talk more about the Edison Trust and its practices, but
first we will take another quick sponsor break. Now. The

(17:57):
Motion Picture Patents Company had formed in nineteen o eight
in an effort to get the film industry, which was
kind of all over the place in terms of technology
and stability, to homogenize and settle on one standard. We've
talked about this a little bit on previous shows, like
when we talked about the Lumire brothers and and some
others and how everybody was developing like their own films,
their own cameras, etcetera. But this trust involved a lot

(18:20):
of companies, some of which you have also heard of
on the show before. So obviously Edison, Vitograph, Biograph S
and a Sellig Lubin, Callum path A, Melliaise, and Gaumont.
All of these different players had been involved to some
degree in the patent wars around the various technologies that
had been developed in this new industry. But by assembling

(18:42):
as a trust, they had almost all of the industry's
patents and they were in a position to demand that
anyone showing a motion picture had to pay the Trust
a licensing fee for the technology that was involved. Eastman
Kodak was under contract to only sell film to licensees
of the Trust. Film length was limited by the Trust

(19:03):
to ten to twenty minutes, and actors were not credited
per their rules. Yeah, the Edison Trust was like, don't
credit actors because famous actors will start asking for more money.
We're going to create a financial problem. Also, like they
just wanted to control everything. Rolled my eyes really hard.
As you can imagine, independent filmmakers and small theater owners

(19:27):
were not big fans of the Trust. And we mentioned
before that you know, there was a desire for longer films,
but if they weren't letting enough film be sold to
make longer films, that couldn't happen either. Some of these
creators opted to import film and equipment from Europe to
try to get around the trust's monopoly, and the Trust
was really not keen on Hodkinson's ideas, which shifted things

(19:49):
around in a way that would change their model of
extracting licensing fees for everyone along the line in a
film's production and distribution and ultimately mean that they made
less money. The us In Trust was eventually undone through
lost legal battles and legislation. In nineteen thirteen, the U. S.
Supreme Court ruled in Bower and Ce versus O'Donnell that

(20:10):
a patent holder couldn't fix pricing related to use of
that patent. The following year, Congress passed the Clayton Antitrust Act,
which was designed to regulate businesses and prevent monopolies, and
its regulations meant some of the trust's practices were illegal.
There was also a nineteen seventeen case of mp PC
versus Universal Film Manufacturing Company, in which the court ruled

(20:34):
in Universal's favor that once a patent was licensed, the
licensey was not legally bound to the licenser for any
other reason. By the time all of these paddles played out,
most film producers had migrated to Hollywood to get away
from the Edison Trust and do things their own way. Anyway,
back to Hodginson, he approached this issue of wanting to
convince his bosses that he was onto something important really methodically.

(20:58):
At the end of nineteen twelve, he made two charts
that compared the projected future of the film industry with
this method in place, versus the continuation of the States
rights and road show approach. He took these charts and
all of this data to New York to meet with
General Film Company leadership, but he was ultimately unsuccessful. Hodginson
had already implemented his distribution model in northern California as

(21:22):
part of his nineteen eleven testing, and his bosses told
him to change it back to the old way. He
refused and was fired in May of nineteen thirteen. Yeah,
for the record, like The theater owners in in the
San Francisco area loved this model. They were completely good
with it. But Hodginson did not leave the industry. He

(21:42):
believed in his new approach, and so he formed a
company to distribute films for independent producers. That company, the
Progressive Company, got distribution deals with Famous Players Company and
Lasky Feature Play Company, which became founding members of Paramount.
Before those two companies merged together. Hodginson and Zooker had
actually meant when Hodginson had gone to New York to

(22:03):
plead his case with the heads of General Film. The
story behind the switch to Paramount from Progressive is that
Hodginson discovered on a visit back to New York there
was already a Progressive Pictures. It was in the New
York phone Book. This is also when he has said
to a first doodle the sketch of a mountain and
stars that has been the basis of the Paramount Pictures

(22:26):
logo ever since. Yep, they're still using it. Uh. In July,
Paramount took out a two page ad in the periodical
Moving Picture World touting the distributor partners throughout the US
that they had arranged with a map of the United
States showing how almost every part of the country could
be reached through Paramount, with the call to action to

(22:47):
local exhibitors quote, get in touch with our distributor in
your territory and procure the finest motion pictures the world
has ever seen. Famous Players Film Company, Jesse Alaski, Feature
Play Company, and bos Were Incorporated are all called out
as producers of Paramount distributed films in the ad, and
to ensure that potential customers knew that foreign pictures could

(23:10):
be obtained through Paramount as well. Along the bottom of
the spread was the phrase quote and the cream of
the world's market. In addition to the above manufacturers. Once
the Famous Players Last Ki Corporation was formed from the
two existing companies, it became the primary supplier of films
to Paramount as a distributor, making up an estimated seventy

(23:30):
of their distribution titles. There had been a bump in
the road early on in the relationship among these businesses. Zooker,
Laski and other producers had all signed five year contracts
with Paramount, but because of the entirely new nature of
the distribution model they were agreeing to, they didn't really
grasp how much power it gave Hodginson until later, and

(23:52):
that was problematic, even though producers were then making more
money than ever thanks to his changes to the business.
Zucker try to get out of his deal because of it,
and Hodkinson would not have it and his anger, Zooker
saw a bigger opportunity and made a move. On March first,
nineteen fifteen, Zucker renegotiated his deal with Paramount, and this

(24:13):
was not as you might expect a situation to get
out of his existing deal early. No, it was instead
to extend the contract to twenty five years. That sounds kooky,
but man was he thinking eighteen steps ahead of everyone else,
because over the next two months, Zooker and his friend
Jesse Laski sold of their companies to Paramount. This also

(24:36):
sounds a little crazy, but it was part of a
multi layered plan to gain power for themselves. They used
the money from the sales as well as alone to
start buying Paramount stock on the down low until they
had accumulated a combined controlling share of Paramount. On June
nineteen sixteen, W. W. Hodkinson was forced to resign, as

(25:00):
well as the Paramount treasurer, who was loyal to him.
That was Raymond Pauli. Zoocker was in charge of the
reorganized company and Famous Players last Kie Corporation merged with
Paramount Pictures. The Paramount name was still used for distribution,
while Famous Players Laskie was still the production entity. Yeah,
this is one of those things that's always a little
confusing whenever you're reading like business histories. It still goes

(25:25):
on today. Right a business will get purchased by another,
or they'll merge, but they'll still keep using the separate names,
and that can get a little confusing. That's kind of
what was going on here. We have been part of
deals like that before, and we've tried to sort it out.
I was gonna sarcastically say, we've never had that happen
to us. Yeah, we know exactly what that's about. As
for Hodkinson, who was adamantly against the vertical integration of production,

(25:48):
distribution and exhibition that Paramount was now working with, he
went on to work in a number of new distribution companies,
some of which he founded for about a decade after
he was ousted by Zooker, and he moved into the
Dasian industry and out of entertainment in and that is
where we are going to pause for this episode. Next
time around will cover how Zookers newly combined entertainment Powerhouse

(26:10):
started using this massive footprint to push competitors to the side.
Are you ready for a little listener mail? I sure am.
This is from our listener, Dan, who wrote, Dear Holly
and Tracy, I'm very behind in my podcast listening. Dan,
me too, three he said, I have only reached late
May in my playlist, and I consequently missed your June

(26:31):
twelve deadline. I'm writing because you said that you missed
hearing from fans during your tours. While we might never
have met, I am a total fan of you both.
I love your episodes. I've been a long time listener
of the podcast, going back to the days of Candice
and Josh. I should know what happened to Candice. But
I'm also a longtime listener stuff you should know with
Josh and Chuck. I'm a Massachusetts resident and enjoy hearing

(26:52):
about Tracy's Boston adventures during COVID nineteen. I especially missed
the street festivals in the North End and getting a
Java Barry at Dairy Joy in Weston. Holly, I feel
a special connection to you. My family are big Disney
and Star Wars fans. My wife is a runner, ran
the Kessel Run at Run Disney in TV and her
first marathon at Walt Disney World in eighteen. I admit

(27:13):
to checking for your bib at that later race. If
you had entered, I would have asked you to meet.
She's also a stitcher and used to craft costumes for
Halloween adventures for our nieces and nephews. My favorite was
a toy story takeoff when she made an Emperor's or
costume for my son and he got to deliver the
line buzz I am your cousin when he was unmasked.
I enjoyed listening to your drawing, the story of animation podcasts,

(27:34):
his avatar work as Phineas Jay whoopee again. Best wishes
do you both stay safe and thank you for all
the joy you bring. I won't suggest a topic for
an episode because I have always been delighted with whatever
you present. Dan, Dan, that's so sweet. That is so sweet.
I love it. I just wanted to read it because
it's such a delightful and nice email, and I like
knowing that there are people who have very overlapping universes

(27:55):
of fandom with mine. Yeah, I have not run a
marathon's it's the one I ran in because that was
a lot and I didn't want to do it again.
I ran a lot of halves after that still, but
I haven't run in a while. But uh yeah, it's
a super fun. It's one of those things. I don't
I don't know how these things are going to work

(28:16):
going for at all. So I hope that your wife,
you know, finds a way through uh and and is
able to do events that are interesting to her in
the future, because I have no idea what running events
will look like in another five years. Even I don't.
I don't have any idea. But thank you, thank you,
thank you for sharing this with us. It makes me

(28:37):
so happy. And I'm always delighted when anyone listens to
drawing because I really loved doing that show. Um yeah, thanks, thanks,
thanks Dan for all the things. And also because I
know that some people did miss that June twelve deadline
to post questions and because they like me and you
are I can't keep up with everything that they have
to listen to. And there is no shame in that.

(29:00):
All the things that I used to listen to podcasts
during are not are not happening? Don't happen anymore? Yeah,
not so much. Also just so much going on. Uh.
If you would like to write to us about all
the things going on them may or may not be
keeping you from keeping up with your usual podcast listening,
you can do that at History Podcast at iHeart radio

(29:21):
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(29:42):
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